Wyloo Metals to Cease Operations at Western Australian Nickel Mines Amid Price Crash

Wyloo Metals, a private nickel producer under the ownership of Australian tycoon Andrew Forrest, has announced the impending shutdown of its mines in Western Australia. This decision, influenced by a significant drop in nickel prices, marks a pivotal moment for the company, especially considering its recent acquisition of these mines only half a year ago.

Set to commence care and maintenance from May 31, the closure of the mines near Kambalda has immediate repercussions on Wyloo's business commitments. A notable impact is on its agreement with BHP Group, where Wyloo has indicated its inability to meet the obligations of a nickel off-take agreement due to expire at the end of 2025.

The slump in nickel prices, a critical component in stainless steel and electric vehicle batteries, is largely driven by a substantial increase in supply from Indonesia. This influx of cheaper nickel has been a major disruptive force in the market, impacting several companies within the industry. For instance, First Quantum Minerals also recently announced the cessation of its nickel and cobalt operations in Australia, alongside a significant reduction in its workforce, citing similar reasons of lower metal prices and increased operational costs.

Following Wyloo's announcement, concerns extend to the broader mining industry. BHP, the world's largest miner, last week indicated potential write-downs in its nickel assets to mitigate the impact of the price crash. This industry-wide trend underscores the volatility and challenges currently facing the nickel sector.

Despite these setbacks, Wyloo Metals continues to engage in other ventures. In 2023, the company ventured into a joint agreement with IGO Limited, focusing on producing battery-ready materials at a plant near Perth. Additionally, Wyloo is exploring opportunities to develop its own nickel concentrator in the Kambalda region, suggesting a sustained interest in the nickel market despite the present downturn.

These developments in the nickel industry are part of a larger narrative that includes environmental and safety concerns, such as the reported mass deforestation due to foreign-backed nickel projects in Indonesia and safety violations in nickel smelter operations.